From the U.S. Government Accountability Office, www.gao.gov Transcript for: Medical Credit Cards Description: Audio interview by GAO staff with Cindy Brown Barnes, Director, Financial Markets and Community Investment Related GAO Work: GAO-14-570: Consumer Finance: Credit Cards Designed for Medical Services Not Covered by Insurance Released: July 2014 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's July 2014. Financial institutions offer medical credit cards through participating providers to pay for services that health insurance doesn't cover, such as dental and cosmetic procedures or veterinary care. A team led by Cindy Brown Barnes, a director in GAO's Financial Markets and Community Investment team, recently reviewed the marketplace for medical credit cards. GAO's Sarah Kaczmarek sat down with Cindy to talk about what they found. [ Sarah Kaczmarek: ] Why would someone sign up for a medical credit card? [ Cindy Brown Barnes: ] Medical credit cards are used to pay for medical-related procedures that generally are not covered by health insurance. Consumers sign up for these products at their doctor's office or dentist offices, and they usually want to take advantage of promotional periods such as deferred interest. Consumers also use medical credit cards to keep credit off of their more conventional credit cards. [ Sarah Kaczmarek: ] Let me ask you. How are these cards different than a traditional credit card? [ Cindy Brown Barnes: ] Medical credit cards can only be used to pay for medical-related services. Medical credit cards are, typically offer promotional periods such as deferred interest period. Consumers like those because if they pay off the card during these promotional periods, which are generally 6 to 24 months, they don't have to pay interest on the card. Consumers find out about these cards through their health care providers—their doctor's offices, the dentist office. That's usually when they first learn that this is an option that they can use. [ Sarah Kaczmarek: ] Are medical credit cards regulated the same way as conventional credit cards? [ Cindy Brown Barnes: ] Yes. Medical credit cards generally are subject to the same state and federal statutory provisions as other lending products. Under the federal statutes, that could be, laws such the Truth in Lending Act as well as the Fair Credit Reporting Act. [ Sarah Kaczmarek: ] What financial institutions offer medical credit cards, and how big is this industry? [ Cindy Brown Barnes: ] We found that no comprehensive source of information existed on the medical credit card industry and the market share of its participants. We identified four companies that appeared to be among the largest market participants, and they are Care Credit, Citibank, Commodity Capital Bank, and Wells Fargo Financial National Bank. Care Credit issues the majority of medical credit cards. A registration statement filed with the Security and Exchange Commission in March 2014 reported that Care Credit had over four million active cardholders and over 177,000 health care providers and veterinarian providers in its network, and revenues of approximately 1.5 billion in calendar year 2013. [ Sarah Kaczmarek: ] Finally, for consumers using medical credit cards or considering signing up for one, what do you see as the bottom line of this report? [ Cindy Brown Barnes: ] Medical credit cards are an alternative form of financing the health care procedures that are not covered by health insurance in general, but there have been some concerns about these cards. Some of the concerns center around deceptive card enrollment practices, where consumers were not receiving the actual card statement, the agreements, the credit card agreements, and there also were concerns centered around inadequate disclosures. The bottom line is that consumers should ensure that they receive the necessary disclosures and that they understand all promotional offers. [ Background Music ] [ Narrator: ] To learn more, visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the Congressional Watchdog, the U.S. Government Accountability Office.